Midwest Floods of 2008: Potential Impact on Agriculture (CRS Report for Congress)
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| Release Date |
Revised Aug. 18, 2008 |
| Report Number |
RL34583 |
| Report Type |
Report |
| Authors |
Randy Schnepf, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Unusually cool, wet spring weather followed by widespread June flooding across much of the Corn Belt cast considerable uncertainty over 2008 U.S. corn and soybean production prospects. As much as 5 million acres of crop production were initially thought to be either lost entirely or subject to significant yield reductions. Estimates of flood-related crop damage varied widely due, in part, to a lack of reliable information about the extent of plant recovery or replanting in the flooded areas. These circumstances generated considerable market angst and U.S. agricultural prices for corn and soybeans, as reported on the major commodity exchanges, hit record highs in late June and early July. Since then, most of the Corn Belt has experienced nearly ideal growing conditions suggesting the potential for substantial crop recovery, and market prices have weakened accordingly.
On August 12, 2008, USDA released the first crop production estimates for corn and soybeans that have incorporated survey data from the flood-affected regions. According to USDA, U.S. farmers will produce the second largest corn crop on recordâ12.3 billion bushelsâin 2008, up about 5% from the previous month's forecast, but down over 6% from last year's record crop. USDA's soybean crop forecast of nearly 3 billion bushels is unchanged from July, but up 15% from 2007. These production forecasts reflect three factors. First, flood-related acreage losses appear to be substantially less than initially projected. Second, nearly ideal growing conditions that have persisted across the Corn Belt since late June have contributed to sharp increases in USDA's yield outlook for corn, thus, offsetting flood-related area losses. Third, despite a 17.6% increase in planted acreage in 2008, soybean production is flat due to a diminished yield outlookâlargely the result of the lateness of the crop's planting and development, as well as dry conditions in the Delta, the Southeast, and the Northern Plains.
Congress has appropriated nearly $480 million in emergency USDA funding, primarily for conservation activities in flood-affected regions, as part of the FY2008 Supplemental Appropriations Act (P.L. 110-252). USDA has also committed resources to the flood-affected areas including rescue and clean up, food assistance, housing, community assistance, business assistance, and farmer and rancher assistance. In addition, USDA announced permission, on July 7, 2008, to use CRP land for grazing only in disaster and contiguous counties.
In light of current market uncertainties surrounding the 2008/09 supply and demand balance for corn and soybeans, and the outlook for extremely tight supplies by late summer, commodity market prices are likely to remain volatile through the remainder of the growing season. If crop production ultimately proves less than forecast (to be determined at harvest time), it will likely contribute to higher commodity prices, thereby adding to pressure on policymakers over concerns about consumer food price inflation, international food aid availability, and the soundness of policy that dedicates commercial agricultural crops to biofuels production, particularly corn used for ethanol.
This report will be updated as events warrant.
